Monday, December 29, 2008

Credit Card Reform Update

On December 18th, Congress passed a reform proposal to take effect July 2010 that puts to rest all the abusive contractual terms that allow credit card companies to blindside cardholders with excessive charges. The reform includes:
  1. Eliminating double-cycle billing.
  2. Eliminating confusing due dates.
  3. Eliminating Universal Default.
  4. Stopping the charging of over limit fees from temporary holding amounts (i.e. car rentals)
  5. Requiring higher interest rate amounts be paid down first.
  6. Simpler credit card terms.
  7. Clearer disclosure in advertising
  8. Banning "fee harvesting" from cardholders with lower credit scores.
  9. Disclosing foreign transaction fees in solicitations, before the account is opened.

Sounds great doesn't it? I bet your congressman wants you to know they are doing this for you, and are going to make sure you are taken care of in terms of consumer credit. Well, don't break out the bubbly stuff yet. In the meantime, responsible customers who never make a late payment are getting significant rate hikes. Also, your Senators and House Representatives are milking this for a couple years to garner favor with voters until legislation comes down the pike to either overturn this or make it unenforceable. Two years is a long time. If you bet against this actually becoming reality, the odds would be in your favor. Just taking a closer look at the list and asking what it would look like in reality makes you wonder how real it really is, some of these would require an entire new oversight agency just to monitor and enforce.

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